Earnings season can be a time of feast and famine, as companies announce their earnings and investors respond with either an outpouring of exuberance that at times mirrors a Super Bowl victory, while at other times can resemble the disdain of an angry mob. These oversized moves in stock prices can also have an effect on the stocks indexes of which they are members. This usually explains why the major market averages can at times disagree with one another on a given day.
This was the case on Tuesday as the Dow Jones Industrial Average fell 0.54 percent while the Nasdaq Composite held on to a slight gain of 0.02 percent, as a couple of leading financial companies that make up the Dow suffered above average losses on the day.
Most U.S. market averages began the day trading in negative territory but by the closing bell were solidly in the green. Despite the Dow’s poor performance on Tuesday, U.S. small company stocks finished higher with the Russell 2000 small company index gaining 0.70 percent.
If there was one event that stood out during the day it was President Trumps’ meeting with leading U.S. drug manufacturers on Tuesday. After telling the drug manufacturers a few weeks ago that they were “getting away with murder” due to high prices, this time he seemed to adopt a softer tone. During the meeting Trump backed away from the idea that the U.S. would be setting drug prices and reinforced his plan to lower taxes, speed up regulatory approval and help protect drugmakers from foreign countries able to charge less because U.S. consumers pay higher prices. In return Trump maintained that the companies needed to relocate there manufacturing plants to the U.S.
Not surprisingly health care and biotechnology stocks received a boost following the news with the Dow Jones U.S. Heath care index up 1.54 percent and the Nasdaq Biotechnology index higher by 2.84 percent on the day. Tuesday’s gains also shifted health care stocks into the top position for the week with the Dow Jones U.S. Health care index gaining 1.98 percent over the past five trading days, followed by the Dow Jones U.S. Utilities index rising 1.57 percent over the same period.